The short answer is no, the multifamily industry isn’t heading toward a bubble, but the long answer is more complicated. Cap rates dropped across the country in 2012 but remain above peak levels. Further, when one considers the interest-rate differential between now and the peak, cap rates are not close to being in bubble territory. That said, billions of dollars of capital have been raised to invest in multifamily, and yields in major markets are too low for most of this capital, so we’ll be watching nonmajor markets carefully to see if this glut of capital drives pricing into bubble territory. On a related note, most of the development activity in this cycle has been in major metros with high barriers to entry, but if development starts to ramp up in smaller markets, watch out. Lastly, any sudden movements in terms of either interest-rate policy or the GSEs’ role in the market could change the game entirely. — Ben Thypin,director of market analysis, Real Capital Analytics

Ben Carlos Thypin

I am currently the co-founder of Quantierra, the world's first data driven real estate brokerage and investment manager. In my former life as Director of Market Analysis at Real Capital Analytics, I worked with press outlets large and small to provide them with great data and insightful commentary. Here are some of the results of this collaboration. For the rest, please check out the News Archive.